IRB Infrastructure Announces Investment Of Up To INR 4,400 Crores By GIC Affiliates In Its Road’s Business
IRB Infrastructure Developers Limited announced Investment by affiliates of GIC (“GIC”), Singapore’s sovereign wealth fund, in its road platform. As part of the transaction, IRB will transfer 9 of its BOT assets (“Portfolio”) into a private Infrastructure Investment Trust in which IRB will hold controlling stake of 51%. The Portfolio spans across c.1,200 kms in Haryana, Uttar Pradesh, Rajasthan & Gujarat, Maharashtra and Karnataka. Three of these projects have recently become operational and balance six are under various stages of construction. Five of the assets under construction are 4 to 6 laning projects, where tolling as well as construction has already begun. These projects are strategically located along economic corridors and across tourist hubs.
The deal was approved by the board today, following which IRB has signed binding definitive agreements with GIC for a total investment of up to INR 4,400 Crores, including funding of future construction costs.
The proposed Investment is subject to regulatory approvals, lender consents and other applicable approvals.
The Investment proceeds from GIC will be used for:
- Deleveraging of the Portfolio, and
- Equity funding for under construction projects of the Portfolio
IRB will have management control over these assets with GIC having standard/ customary rights of a Financial Investor and corresponding board representation.
The balance construction and O&M for the Portfolio will be executed by IRB as the Project Manager for the Private InvIT.
GIC will also hold 49% in the Investment Manager (IM) entity formed to manage the Private Trust.
The net revenue of the Portfolio in FY 2019 was c. INR 630 Crores. At the completion of construction, the Enterprise Value of the Portfolio would be c. INR 22,500 Crores.
With this transaction, the Portfolio will be significantly deleveraged, and IRB will get material equity support for construction completion, enhancing its project execution capabilities and increasing visibility for its EPC and O&M order book.
Commenting on the occasion, Mr. Virendra Mhaiskar, CMD, IRB said “This investment symbolizes the confidence shown by a global institutional investor in IRB’s ability to build quality infrastructure for India. We are delighted to have GIC as our long-term investor in this growth story. IRB and GIC plan to also explore future road sector opportunities in India together through the Private InvIT, exhibiting IRB’s strength and domain expertise as a market leader in Indian Roads and Highways sector.”
Bajaj Consultants Private Limited acted as the exclusive financial advisor to IRB for the transaction.
S&R Associates acted as legal advisor to IRB and Nishith Desai Associates acted as legal advisor to GIC.